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Outreach to the Chamber of Commerce and the EVC As directed by Council, staff met with the Economic Development and Government Relations Committee of the Chamber of Commerce (EDGAR) on April 28, 2015 and with the Economic Vitality Committee of the City (EVC) on May 20, 2015. There was some acknowledgement by the EDGAR members that the update to the fees was reasonable considering the length of time since their last increase and the proposed amounts relative to neighboring or comparable cities. However, there was also some philosophical opposition to the idea that the City needs to achieve 100% cost recovery for development services and that development generates ample revenues and benefits to the City through increased property taxes, sales taxes and jobs. Additionally, the Chamber requested that more focus be placed on full implementation of the City's permit-streamlining recommendations identified through the 2008 customer service review team (CSRT) process. Attached is a memo from the City Manager (Attachment 1) that addresses this issue and the status of the implementation of the CSRT's recommendations. EVC also raised similar recommendations. Staff is committed to addressing these issues in the coming fiscal year; however, some of the proposed recommendations will require further review and consideration by the City Council (e.g. zoning code update, municipal code amendments, etc.). Enterprise Fund In order to better monitor the cost of development related services and the recovery of these costs through user fees, Staff is recommending that the City utilize an enterprise fund for accounting for development services starting no later than 2016/17FY. Traditionally these types of services are accounted for in the General Fund. However, cities that have a goal of 100% full cost recovery of these expenses, have moved these operations into a separate enterprise fund to better account for these costs and the recovery of these costs. Conclusion Based upon 2014/15FY data for over 200 development related user fees, the City is expending $8,840,088 and is estimated to recover only $4,254,015 in revenue. The result is an annual General Fund subsidy of $4,586,073 of development related services. The recommended fee increases would reduce this subsidy by approximately $2.738 million to a new subsidy level of approximately $1,847,492. Staff recommends the City Council adopt by resolution the increase in development related user fees in order to reduce the subsidy by the General Fund. Staff also recommends an annual increase in these fees and construction valuation tables effective January 1 each year starting January 1, 2017 based on the annual increase in the ENR CCI. Staff recommends that the City review these fees once every two years as part of the Two Year budget process in addition to the annual ENR CCI increase, with the goal of moving towards 100% cost recovery. Page 9 of 10